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Microsoft To Apple: Don't Take Your Normal 30% Cut of Office For iOS 724

Posted by Soulskill
from the gotta-pay-the-toll-to-cross-the-bridge dept.
An anonymous reader writes "Sources tell All Things D that Apple and Microsoft are at loggerheads over the cut Apple is expected to take of Office 365 subscriptions sold through Microsoft Office for iOS, which is expected to launch sometime next year. An update to Microsoft's SkyDrive app has been rejected after the company was 'pushing Apple to adjust the 70/30 revenue split in its developer license agreement. Predictably, Apple has refused to comply. It’s not yet clear what sort of concession Microsoft is seeking, but whatever it is, Apple’s evidently not willing to consider it.'"
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Microsoft To Apple: Don't Take Your Normal 30% Cut of Office For iOS

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  • We are the 30% (Score:5, Insightful)

    by Quakeulf (2650167) on Wednesday December 12, 2012 @06:38AM (#42258999)
    It's Apple's platform. I agree that a 30% cut is a bit too much, and there could be tiers introduced based on company size, revenue, etc., but to manage this would probably be a bit too much for them, although it would be beneficial for small startups.

    But then again, what would the Microsoft do if they were in their position, suddenly play fair?
    • by paiute (550198)

      But then again, what would the Microsoft do if they were in their position....

      40%

    • Re:We are the 30% (Score:5, Insightful)

      by whisper_jeff (680366) on Wednesday December 12, 2012 @07:33AM (#42259315)

      I agree that a 30% cut is a bit too much...

      No. It isn't. The only people who think that are those that have an axe to grind with Apple.

      a) Pretty much every other app store out there has the same deal and, more importantly

      b) When a company sells digital software themselves, they don't get to keep 100% of the sale price. They have to pay for hosting, bandwidth, marketing, sales processing, manhours involved in all of this, etc., etc., etc. Those numbers start to add up very quickly and anyone who's been even vaguely involved in producing and selling a product knows that they can quickly add up to near or above 30%. And doing it yourself doesn't give you the same marketing potential that Apple has when they do it and that marketing potential is not easily ignored.

      Seriously, the only people who still bring this up (and mod it "Insightful" on /.) are those who are utterly ignorant of reality and just want to gripe about Apple (while ignoring all the other app stores operating under the same terms).

      • Re:We are the 30% (Score:5, Insightful)

        by bhagwad (1426855) on Wednesday December 12, 2012 @07:52AM (#42259395) Homepage

        Umm...Apple already charges developers for merely listing their apps - $99 a year. That's HUGE and more than covers all the stuff you talked about - hosting, bandwidth etc.

        They don't need to do this. They're just being greedy dicks.

        • Did you seriously just claim that $99 is HUGE(in all caps, even)? Seriously? I would imagine, for the average developer, $99 per year is VERY low on their expenses, after things like coffee.

          We clear have different definitions of HUGE...

          • Re:We are the 30% (Score:5, Interesting)

            by bhagwad (1426855) on Wednesday December 12, 2012 @09:06AM (#42259953) Homepage

            FYI, a cup of coffee costs less than 10 cents in India (which is where I live). We're talking about about 1000 cups of coffee every year for no tangible benefit since I get the same for free on Google Play.

            It may seem less, but I have this thing against throwing money away when I don't have to....

            • by phayes (202222)

              Well then, don't spend the money & stay out of the Apple Appstore which is where the lions share of profits are taking place in the mobile marketplaces. By profits I do not mean Apple's but that of all the devs in the Apple Appstore compared to all the devs in all the others.

              There are two expressions that seem to apply: Cutting off your nose to spite your face & you gotta spend money to make money.

              In any case, should you decide to avoid spending the princely sum of 1% of your yearly earnings to gain

              • by bhagwad (1426855)

                Who's whining? I get my satisfaction from seeing my app used by people and want no financial compensation in return.

                In which world are you living that this is seen as a bad thing?

        • by Bogtha (906264)

          Apple already charges developers for merely listing their apps - $99 a year. That's HUGE and more than covers all the stuff you talked about - hosting, bandwidth etc.

          Let me get this straight - you think that digital marketing, billing and distribution of Office, one of the most widely used pieces of software in the world, can be achieved globally for less than $99?

        • $99 is pretty trivial...not huge. There's no way it could cover the costs associated with vetting/hosting/distributing/selling any moderately successful app. And don't forget Apple wants to make a profit. Consider that at 30% - Apple is mostly covering costs and making a small profit from the App Store. It's not a significant source of revenue for them as a company.

      • by wisty (1335733)

        > They have to pay for hosting, bandwidth, marketing, sales processing, manhours involved in all of this, etc., etc., etc.

        The one thing Apple does which is really valuable is payment processing. They have the customer's CC number, so there's a lot less steps to purchase. There's also a lot more trust, as you know Apple isn't likely to sell your CC.

        That's it. Everything else is a bonus.

        But having the customer's CC in the system is worth at least 30%.

        • Re:We are the 30% (Score:5, Interesting)

          by SvnLyrBrto (62138) on Wednesday December 12, 2012 @11:16AM (#42261389)

          Even more importantly, since Apple takes care of all the credit card stuff, and as an app developer you never have cardholder data in your possession; you don't have to worry about PCI DSS compliance.

          I have enough headaches enforcing PCI at work. If I had to deal with it at home I wouldn't touch the App Store, or anyone else's mobile store, with a 10' pole.

      • Re:We are the 30% (Score:5, Informative)

        by recoiledsnake (879048) on Wednesday December 12, 2012 @08:07AM (#42259497)

        No. It isn't. The only people who think that are those that have an axe to grind with Apple.

        a) Pretty much every other app store out there has the same deal and, more importantly

        No, stop playing the "poor Apple" card.

        This is about in-app purchases like Netflix subscriptions, ebook stores etc. Not 30% cut of apps.

        Seriously, the only people who still bring this up (and mod it "Insightful" on /.) are those who are utterly ignorant of reality and just want to gripe about Apple (while ignoring all the other app stores operating under the same terms)

        Wrong again.

        From http://blogs.msdn.com/b/windowsstore/archive/2012/07/20/making-money-with-your-apps-through-the-windows-store.aspx [msdn.com] [msdn.com]

        Using your own billing system

        Your app and service may already depend on a particular transaction provider or benefit from ties to other lines of business. Your customers want the trust and efficiency of a familiar, trusted transaction experience. You can use your own transaction provider within your app to provide the experience your customers expect.

        If you are not using the Windows Store as your transaction provider, you will want to make sure that your app meets all of the certification requirements such as: Identifying the transaction provider to the user during purchase confirmation Prompt the user for authentication before processing the transaction Your payment processor must meet the current PCI Data Security Standard

        For example, this wouldn't happen on Windows Store.

        http://voices.washingtonpost.com/fasterforward/2011/02/apple_bans_sony_e-reader_app_a.html [washingtonpost.com]

        http://www.tuaw.com/2011/02/21/apple-rejects-readability-due-to-subscription-policy-where-wi/ [tuaw.com]

        http://www.publishersweekly.com/pw/by-topic/digital/retailing/article/48130-apple-forces-e-tailers-to-remove-in-app-links-kobo-to-offer-html5-browser-ereader.html [publishersweekly.com]

        This wouldn't have happened on the Windows Store and probably not on Play Store as well(you can always sell an APK directly for sideloading or use one of the 3rd party stores on Android).

        Sorry, but Apple apologists like you need to come up with a better defense of Apple than trying to muddy up things by saying "everyone else is doing it". They're simply not.

  • by Sulphur (1548251) on Wednesday December 12, 2012 @06:39AM (#42259007)

    Is 100% too much?

  • by skipkent (1510) on Wednesday December 12, 2012 @06:42AM (#42259017)

    A threatening note was tied to a chair and flung through a window at Apple headquarters.

  • by pointyhat (2649443) on Wednesday December 12, 2012 @06:42AM (#42259019)

    As much as I hate Microsoft, I'm behind them here. Perhaps they should just drop all their apps suddenly and promote the Android and Windows Phone versions?

    • by SerpentMage (13390) <ChristianHGross.yahoo@ca> on Wednesday December 12, 2012 @07:00AM (#42259125)

      No Apple has a point here. The reason why Apple charges 30%, even if that may seem high, is that its FAIR! How many times do bigger companies have an unfair advantage over smaller companies? Apple is saying, "hey big or small you pay the same fee!" Of course Microsoft is irked because they play by a different set of rules. Rules that they like to make up. Oh wait, this is the company that has been charged with monopolistic practices.

      My answer to Microsoft, "tough shit live with it!"

      • The reason why Apple charges 30%, even if that may seem high, is that its FAIR!

        I can hardly think of any reasonable definition of "fair" in this context that would be *that* simplistic. It's the same with taxes. You can only keep saying "if everyone pays 20% income tax it's FAIR" until you realize that poorer people are more taxed by consumption/excise taxes already. Different app costs, differtent app complexity...BTW, what are the actual costs to Apple anyway?

  • Not actually 70/30 (Score:4, Informative)

    by gnasher719 (869701) on Wednesday December 12, 2012 @06:43AM (#42259023)
    One thing to remember: It is not actually the case that Apple gets 30% of the money, and the developer gets 70%. Each app has an "official" price, lets say $9.99 or $10 to make the maths easier. If you purchase it, the developer gets $7. However, Apple doesn't always get $10. There have been student offers where you could buy a Mac and get $100 for store purchases, which means Apple gets nothing and pays $70 to developers. Plenty of people give gift cards for Christmas, and if you buy a $50 gift card from some store, that store is taking its (generous) cut and Apple doesn't get $50, but still pays $35 to developers. I always manage to stock up with gift cards purchased with 20% rebate, so for £50 official price software, music or books that I buy, the developers get £35, I paid only £40, so I don't think that Apple keeps 30% of that.

    Now Apple's plan is not to make money from the stores (thought is just a welcome side effect), but to have good app stores to make you buy Macs and iPhones and iPads. Still, if Microsoft got say 80% of the "official" price, Apple might actually lose money on that.
    • by Robadob (1800074)
      Why can't these app sales be handled like brick and mortar stores. Microsoft sets a price which they sell licenses to apple, then apple can do what they like with said licenses as purchased.
    • by Anonymous Coward on Wednesday December 12, 2012 @07:02AM (#42259139)
      You claim that if you buy a gift card in a store, the store takes a "generous" cut. This is not the case. I am in a position where I order these gift cards for a large retail chain in the US. The margins on gift cards are 1 to 2 percent. So for that $50 gift card, the store profits 50 cents to a dollar. I wouldn't call that generous at all. The only reason we sell them is because people tend to not come in and only buy gift cards, they tend to also pick up greeting cards (a HUGE profit center, percentage wise) and other gift-related items at the same time.
    • by Entropy98 (1340659) on Wednesday December 12, 2012 @07:11AM (#42259179) Homepage

      Who modded this informative?? A significant percentage of gift cards are never redeemed, more than enough to cover the retailers cut and then some.

      You think apple might lose money on 20% transaction fees????? Paypal and other payment processors charge ~$.30 + 2-3% percent transaction fees and they aren't losing money.

      Apple is making 25%+ pure profit on every transaction.

  • by jtownatpunk.net (245670) on Wednesday December 12, 2012 @06:46AM (#42259041)

    Who should I root for when I want both sides to lose?

    Go, banana!

    • by jimicus (737525) on Wednesday December 12, 2012 @09:02AM (#42259911)

      I have mod points, but I'm not going to use them. Instead, I'm going to explain how I believe you're mistaken.

      Back in the late 1990's/early 2000's, Microsoft pretty well owned the desktop. (They still do, to a certain extent, but their stranglehold is starting to look a lot weaker) There was, for all practical purposes, no competition on the desktop whatsoever.

      (Yes, I know Apple existed, I know it was possible to run a Linux desktop, I know more than a few /.'ers did. Hell, I did. But that's not the point. The number of people who did so as a percentage of the whole market were such a tiny minority that for all intents and purposes, they may as well not have existed).

      Anyhow, back to the matter in hand. Office went through several revisions - Office '97, 2000, XP and 2003. For most end-users, there was virtually no difference between any of these versions. It didn't start to get real attention until lots of large organisations started to take OpenOffice seriously. You may or may not like the Ribbon interface, but it does demonstrate that Microsoft are taking Office seriously.

      Similarly, Internet Explorer stayed at version 6 for 5 years. It wasn't until Firefox started to gain serious traction that a new team was put together to write IE7, which was released in 2006. Since then we've had two more versions of Internet Explorer and there's a third on the way; but I don't doubt for one minute that had IE 7 crushed the competition back to 2001 levels, there wouldn't have been an IE 8 or 9.

      The point I'm making is even if you hate Apple with every fibre of your being, even if you think Ballmer should close down Microsoft and give the money back to the shareholders, probably the worst thing that could possibly happen to the technology industry right now would be for your dreams to come true. The entire industry basically moves forward from companies all cribbing ideas off each other; when there's nobody left to crib ideas from things go very stagnant very quickly.

  • by Anonymous Coward on Wednesday December 12, 2012 @06:47AM (#42259047)

    Funny, when it was their OWN store, for the XBox, they wanted $40k to certify a patch on a game:

    http://arstechnica.com/gaming/2012/07/microsoft-comes-under-fire-for-five-figure-xbox-360-patch-fee/

    Suddenly when other companies want *their* cut to sell in *their* store, it's suddenly objectionable?

    Hasn't the tables really turned here, Apple doesn't need MS Office for the iPad to be a success. Indeed Microsoft needs certification for it's Office 365 to succeed. Oh how the mighty have fallen.

    If Microsoft didn't release it for iPad, so what Polaris office or similar would work just fine.

    • I say raise that patch fee to 100k to make sure customers don't have to keep waiting an hour in order to play their game every other week.
  • by HumanEmulator (1062440) on Wednesday December 12, 2012 @07:41AM (#42259357)

    As a small developer, I would love if Apple took a smaller percentage of app purchases (which as others have pointed out isn't really 30% when you factor in referral fees, retail markups on iTunes gift cards and the credit card processing fees they pay out), but it's great that by enforcing rules they are effectively taking a step toward leveling the playing field for the small guys. (Instead of giving sweetheart deals to fellow big guys.)

    But in this case, we're not talking about app purchases-- we're talking about transactions that occur in an app, and this has always been a questionable rule. It a straight tax on transactions. It's in the same vein as Verizon demanding Google pay them because Verizon customers are accessing Google "through their pipes."

    And it's more inconsistent than people realize... I routinely place orders for food in the Delivery.com and the SeamlessWeb apps and because I have no credit card on file with either, I enter my credit card info for payment instead of using an iTunes account. So no 30% goes to Apple for my burrito, but DropBox leaves a link to their website in their SDK and suddenly all hell breaks loose. But Apple has a DropBox competitor and doesn't currently offer burritos I guess...

    • by alen (225700) on Wednesday December 12, 2012 @08:42AM (#42259755)

      apple has a clear rule that it won't charge 30% for physical items

    • by jsdcnet (724314)

      And it's more inconsistent than people realize... I routinely place orders for food in the Delivery.com and the SeamlessWeb apps and because I have no credit card on file with either, I enter my credit card info for payment instead of using an iTunes account. So no 30% goes to Apple for my burrito, but DropBox leaves a link to their website in their SDK and suddenly all hell breaks loose. But Apple has a DropBox competitor and doesn't currently offer burritos I guess...

      It's not that the rule is applied inconsistently, it's that you don't understand what the rule is. The rule is you pay apple 30% if the thing being sold can be used in the app. Doesn't matter if it's a subscription that you can ALSO use online elsewhere, if it's usable in the app, you pay 30%. A burrito can not be used in an app. Dropbox storage can. A subscription to Office365 can.

  • by sootman (158191) on Wednesday December 12, 2012 @07:49AM (#42259379) Homepage Journal

    Is that big mean company not being nice?

    If they don't want to pay to play in Apple's playground, there's a simple, two step solution (with apologies to Larry Wall, I believe):

    1) Make your own mobile platform

    2) Make it popular

  • Apple to MS: No (Score:5, Interesting)

    by Tridus (79566) on Wednesday December 12, 2012 @08:04AM (#42259481) Homepage

    At this point, MS needs Office on iPad more than Apple does. I know that's not the accepted conventional wisdom, but the truth is that in the BYOD trend, people want iOS and Android devices. No CEO walks down to IT and says "I really want a Surface RT!" They do want an iPad because they see their kids with one and think it's fancy and way more portable than the laptop they have now (which it is).

    The danger for Microsoft is that as CEOs suddenly find that they can get by just fine with an iPad and no Office on it, they're going to look at the budget and ask why they're paying MS massive sums of money for Office enterprise agreements. Office is a huge cash cow, and the last thing MS wants is people using something else. Using Office on Surface is ideal. Using Office on iPad is alright, since it continues the Office lock-in. Using something else on an iPad is a nightmare scenario in Redmond.

    Apple would like to have Office, but the truth is that they're doing just fine in the enterprise without it. They don't have to cut Microsoft any special deals, and indeed not doing so makes them look good in the eyes of pretty much all other app developers: everybody likes a level playing field a lot more than they do an environment where Microsoft is special. (That doesn't even mention people who have done Xbox development and would love to see MS get some of its own treatment back, given how lopsidedly awful the terms for development on that platform are.)

    • Re:Apple to MS: No (Score:5, Insightful)

      by jcr (53032) <jcr.mac@com> on Wednesday December 12, 2012 @08:32AM (#42259677) Journal

      At this point, MS needs Office on iPad more than Apple does.

      Exactly. As the PC fades into history and the iPad takes over, MS has a rapidly-closing window in which to maintain their market position as the default business apps vendor.

      I know that's not the accepted conventional wisdom,

      The only people I see who haven't realized it are working in Redmond and trying to pretend that the world isn't changing under their feet.

      -jcr

  • by Anonymous Coward on Wednesday December 12, 2012 @08:21AM (#42259593)

    Tit for tat. Why not?

    • Tit for tat. Why not?

      While I'm torn as to who to root for, your suggestion isn't comparing apples to apples.

      Apple sells the app through their store and they want their normal cut.

      Your proposal states that Microsoft should get a cut because Apple's store-app that connects to Apple's store runs on Windows.

      So... not even in the same ballpark.

  • by jcr (53032) <jcr.mac@com> on Wednesday December 12, 2012 @08:28AM (#42259639) Journal

    Is that Apple doesn't need them anymore. The iPhone alone makes more revenue than all of Microsoft, and it got to this position without MS office. This isn't 1996.

    -jcr

  • Delicious Irony (Score:3, Insightful)

    by Spottywot (1910658) on Wednesday December 12, 2012 @08:31AM (#42259671)
    100 posts in, and no-one seems to have pointed out that Microsoft are complaining about the same type of system they are trying to foist on developers with Windows 8. Fuck off and pay Apple what they ask for, *or* make Windows a free platform to develop on again.

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